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Income-tax Officer, Ward II (2) , Coimbtore Versus Shri M. Ramalingam

2015 (9) TMI 124 - ITAT CHENNAI

Sale of the agricultural land - whether the assessee had no other sources of income and the amount of ₹ 1/-crore advanced by him to Shri Seethapathy Naidu on 13.08.2008 must be the amount received on account of sale of the agricultural land? - Held that:- The amount of ₹ 1/- crore received by the assessee which was advanced to Mr. Seethapathy Naidu on 13.08.2008 would be the on-money received by the assessee towards the sale of his land on 11.8.2008, since the Revenue has not establi .....

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h the order of the Ld. CIT (A) on this count. - Decided against revenue.

Denial of exemption u/s.54F - investments in agricultural land made in the name of the assessee’s son - Held that:- From the sale deed, it is evident that the property belonged to the HUF of the assessee because the land sold was inherited by the assessee and the entire members of the assessee’s HUF are entitled to the property inherited by the assessee from his father’s HUF. Since the existence of the HUF cannot .....

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at liberty to assess the assessee’s HUF subject to complying with provisions of limitations stipulated in the Act and in accordance with our decision in this order on various issues raised by both the parties. We also make it clear that while assessing the assessee’s HUF, the HUF assessee shall be entitled to the benefit u/s.54B of the Act for ₹ 2,92,140/- with regard to investments in agricultural land made in the name of assessee’s son because property of a HUF can be legally held by an .....

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d the extension of the existing house. If the new asset constructed can be construed as a separate dwelling unit and if the conditions stipulated in Section-54F of the Act are complied, then the assessee would be entitled to the benefit of Section-54F of the Act. Therefore, if a fresh assessment is made in the hands of the assessee’s HUF as observed by us in the earlier paragraph of this order, the Ld. Assessing Officer shall examine these aspects and pass appropriate order as per law and merit. .....

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D.R For The Respondent : Mr.K.Raghu,C.A ORDER PER A.MOHAN ALANKAMONY , ACCOUNTANT MEMBER: This appeal is filed by the Revenue and the Cross Objections filed by the Assessee against the order of the Commissioner of Income Tax (A)-I, Coimbatore dated 20.06.2014 in ITA No.94/13-14 passed under Sec.143(3) read with section 147 & Sec. 250 of the Act. 2.1 The Revenue has raised six grounds in its appeal; however, the crux of the issue is that the Ld. CIT (A) has erred by holding that the assessee .....

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d made in the name of assessee s son. ii) The Ld. CIT(A) has erred in sustaining the action of the Ld. Assessing Officer in denying exemption u/s.54F of the Act in regard to construction of the building in the land purchased at Vallingadu by holding that only extension to the existing building has been carried out. iii) The Ld. Assessing Officer has erred in levying interest u/s.234A & 234C of the Act. 3. The brief facts of the case are that the assessee is an individual, filed his return of .....

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143(3) r. W. S 147 of the Act on 13.02.2013 wherein the ld. Assessing Officer disallowed the claim for exemption u/s.54B & 54F of the Act and added a sum of ₹ 1/- crore being the amount paid by the assessee to one Shri Seethapathy Naidu on 11.08.2008. Revenue s Appeal 4.1 Addition of ₹ 1 crore being the amount paid by the assessee to one Shri Seethapathy Naidu. The assessee had made payment of ₹ 1/- crore to Mr. Seethapathy Naidu on 13.08.2008. On query by the Ld. Assessing .....

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the earlier occasion was returned after withdrawing the same from the assessee s bank account. Since the assessee could not produce any proof for the amount of ₹ 1/- crore cash advance received from the purchaser of the property, the Ld. Assessing Officer added the same to the income of the assessee as Rs. income from other sources . While doing so, the Ld. Assessing Officer observed as under:- 5. Assessee, on sale of property at Vellakinar vide registered sale deed dated 11 .8.2008 has r .....

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.2008 30.8.2008 90,00,000/- 90,00,000/- 90,00,000/- 2,30,00,000/ As is apparent from the above table, the earliest credit is only on 16.8.2008. Examination of bank account jointly held by Shri. Seethapathy Naidu (seller of Velliangadu property to the assessee ) and his daughter Smt. Suganthini with State Bank of India, Personal Banking Branch, Ram Nagar, Coimbatore ( where the proceeds from sale of land to assessee Shri.M. Ramalingam have been deposited ) revealed remittance of cash amounting to .....

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and filed a letter stating as below: The amount of ₹ 1.00 Crore paid to shri. Seethapathy Naidu on 13.8.2008 was received as cash advance for sale of our land to Shri.Kumaresan. After credit of the sale proceeds frorn Shri.Kumaresan in our bank account, this ₹ 1.00 Crore was withdrawn from our bank accounts and the same was returned back to Shri.Kumaresan. But we do not have any proof It is seen that no proof has been furnished for the source of above mentioned ₹ 1 ,00,00,000/ .....

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ave gone through the submissions made by the appellant and also the order of the Assessing Officer. As seen from the assessment order, the Assessing Officer at para 5 stated that the earliest credit to the assessee was on 16.08.2008 for the sale of the property at Vellakinar. The Assessing Officer also held that an amount of ₹ 1 Crore was paid to Shri Seethapathy Naidu on 13.08.2008. As seen from the facts of the case the sale of property was vide registered sale deed dated 11.08.2008. The .....

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of agricultural land. As submitted by the Authorized Representative the amount of ₹ 1 Crore was the on-money received in cash on 11.08.2008. Considering that the appellant has sold the property, the Assessing Officer is directed to consider the amount of ₹ 1 Crore as sale consideration and not as Income from Other Sources . This ground of appeal is ALLOWED. 4.3 Ld. D. R argued in support of the order of the Ld. Assessing Officer, and on the other hand Ld. A. R argued in support of t .....

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ction of the assessee during the relevant previous year was sale of agricultural land. The Ld. Assessing Officer has also not made any finding with respect to the other activities of the assessee for earning income from any other source. Moreover it is a common practice to accept on-money on real estate transactions. Therefore, we do not find it necessary to interfere with the order of the Ld. CIT (A) on this count. Cross Objections. 5.1 Ground No.1 - Denial of exemption u/s.54B of the Act for & .....

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77; 6,90,00,000/-being the total sale consideration of the land sold. However, the Ld. CIT (A) came to a conclusion that during course of appellate proceedings the assessee could not furnish any evidence to show that the property was jointly owned by the appellant, his son and his daughter and therefore, upheld the order of the Ld. Assessing Officer. 5.2 Ld. A. R. submitted before us that the land was jointly owned by the assessee, his son and his daughter and referred to the sale deed executed .....

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cuted on 11.08.2008 by the assessee and his children. The relevant para from the sale deed is extracted herein below for reference:- Whereas the above said M.Marudhamalai Gounder died intestate leaving behind his sons M.Palanisamy, M.Kandasamy, M. Ramalingam (Vendor No.1) and M. Subbaiyan and daughter Nanjammal as his legal heirs to succeed his estate. The said M.Kandasamy died intestate leaving behind his wife S.K.Kalammal and daughter Jeyaprabha as his legal heirs to succeed his estate. Wherea .....

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South on the Western Side admeasuring Ao.6.00 out of Ac.9.10 under A Schedule was allotted to M.Palanisamy and likewise North-South on the Eastern side admeasuring Ac.3.10 out of Ac.9.10 under C schedule was allotted to Vendor No.1. Thus, the Vendor No.1 has become entitled to the schedule mentioned property described hereunder, Whereas the Vendors No.2 & 3 are entitled to the under mentioned properties by heirship. Whereas the Vendors are in peaceful possession and enjoyment over the under .....

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tial partition is not recognized for the purpose of assessment under the provisions of the Act. Hence it is apparent that the Revenue has assessed the assessee as individual wrongly for the sale of land owned by the assessee s HUF. Therefore we hereby quash the order of the Ld. A.O. Further we make it clear that the Revenue is at liberty to assess the assessee s HUF subject to complying with provisions of limitations stipulated in the Act and in accordance with our decision in this order on vari .....

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